Dеfendant Insurance Companies employ Plaintiff Randy Combs as an insurance sales agent. Plaintiff sued Defendants pursuant to Oklahoma law, alleging various contract and tort claims related to his agency contract. The district court granted summary judgment for Plaintiff on his claims for breach of contract and breach of the implied covenant of good faith and fair dealing. See Fed.R.Civ.P. 56. Subsequently, the district court granted judgment as a matter of law for Defendants as to the remaining claims of fraud/constructive fraud and breach of fiduciary duty. See Fed.R.Civ.P. 50.
Plaintiff appeals alleging the district court committed numerous errors. Defendants cross-appeal alleging the district court erred in granting summary judgment for Plaintiff on the breach of contract and breach of the implied covenant of good faith and fair dealing claims. The parties agree Oklahoma law applies to this diversity case. We have jurisdiction under 28 U.S.C. § 1291. Although our rationale differs from that of the district court, we affirm.
I.
In April 1993, Plaintiff entered an agency agreement (Agreement) with Defendants. Pursuant to this business arrangement, Plaintiff receives a commission for selling рolicies on behalf of Defendants. Plaintiff is entitled to a bonus commission each year, calculated by the overall “Loss Ratio” on policies he sells. Specifically, the Agreement’s bonus provision states “[Plaintiff] may earn bonus commission each calendar year [he] qualifies]. [Defendants] will pay [Plaintiff] a percentage of the Total Premium [Defendants] receive on [Plaintiffs] Agent Policies and limited by [Plaintiffs] Loss Ratio for a three year period.” The agreement further defines “Loss Ratio” as “the premium [Defendants] earned on [Plaintiffs] Agent Policies divided into the Losses Charged to [Plaintiffs] Agent Policies.” “Losses
In 2005, Defendants settled a lawsuit with an insured for $450,000. The suit derived from Defendants’ alleged bad-faith handling of a claim made on an insurance policy Plaintiff sold. Defendants subsequently included the settlement payment as a portion of the “Losses Charged” to Plaintiffs “Agent Policies.” Because Defendants attributed this payment as a “claim” paid оn one of Plaintiffs policies, Plaintiff did not qualify for a bonus commission in 2005. Plaintiff filed suit alleging the settlement payment was not a “claim” under the Agreement and should not have been included in his Loss Ratio.
Prior to trial, Plaintiff and Defendants filed cross-motions for summary judgment. In granting Plaintiffs motion in part and denying Defendants’ motion, the district court held Defendants were in breach of contract because the application of the settlement payment to Plaintiffs Loss Ratio violated Oklahoma law. The district court relied on Oklahoma case law precluding insured parties from including third-party agents in suits against insurance companies for bad-faith handling of policy claims. Thus, the district court concluded that attributing such bad-faith settlement payments to third-party agents through contract violated Oklahoma public policy. The district court further charged Defendants with constructive knowledge of this Oklahoma law and, therefore, ruled Defendants violated the implied covenant of good faith and fair dealing. Despite Plaintiffs request for punitive damages, the district court limited Plaintiffs recovery on the implied covenant оf good faith and fair dealing claim to contract damages.
During trial on Plaintiffs fraud/constructive fraud and breach of fiduciary duty claims, the district court excluded evidence of Defendants’ business practices outside Oklahoma. The district court also granted Defendants’ motion to exclude Plaintiffs expert witness. At the close of each party’s case-in-chief, Defendants moved for judgment as a matter of law. The district court orally granted Defendants’ motion, holding (1) Plaintiff did not establish the necessary elements for fraud/constructive fraud by clear аnd convincing evidence, and (2) Defendants did not owe Plaintiff a fiduciary duty. Thus, the district court refused to submit the fraud/constructive fraud and breach of fiduciary claims to the jury.
Under the breach of contract and breach of the implied covenant of good faith and fair dealing claims, the district court awarded Plaintiff $27,988.00 in contract damages. This amount was based upon Plaintiffs projected bonus commission without the application of Defendants’ settlement payment as a “claim” paid on one of Plaintiffs policies. The district court also awarded Plaintiff $14,126.25 in attorney fees. Because attorney fees are not permitted for tort actions under Oklahoma law, the district court apportioned Plaintiffs attorney fees between his tort and contract claims, and limited the award to work performed before the district court granted summary judgment on Plaintiffs breach of contract claim. Both parties appeal. For clarity’s sake, we first address Defendants’ cross-appeal.
II.
On cross-appeal, Defendants argue the district court erred in granting summary judgment for Plaintiff on his claims for breach of contract and breach of the implied covenant of good faith and fair dealing. Defendants assert the Agreement does not violate Oklahoma law and contend the Agreement unambiguously includes
A.
Relying on
Timmons v. Royal Globe Ins. Co.,
Defendants argue
Timmons only
precluded a cause of action
by an insured against a third-party agent
for breach of the implied good faith duty owed by the insurance company to the insured under an insurance contract. Defendants believe
Timmons
does not speak to how insurance companies and their agents contract amongst themselves. Defendants’ argument relies on general principles of freedom of contract. Under Oklahoma law, “[a]bsent illegality, the parties are free to bargain as they see fit, and the court may neither make a new contract, or rewrite the existing contract.”
Oxley v. Gen. Atlantic Res., Inc.,
Because we hold the Agreement unambiguously excludes tort payments from the calculation of Plaintiffs Loss Ratio, we need not speculate whether the Oklahoma Supreme Court would find the Agreement at issue violative of Oklahoma public policy.
See Medina v. City and County of Denver,
B.
When interpreting a contract, Oklahoma law requires courts to “consider the entire agreement ‘so as to give effect to every part, if reasonably practicable.’ ”
Scrivner,
The issuе in the instant case is very simple: what does the word “claim” mean? The Agreement states that “Losses Charged” to Plaintiff in calculating his bonus are based on “the amount [Defendants] have paid on claims.” The issue here is whether the word “claim” includes extra-contractual payments, i.e. tort payments, to an insured arising outside of the compensation guaranteed under an insurance policy. The Oxford English Dictionary defines “claim” as:
1. a. A demand for something as due; an assertion of a right to something ... to lay claim to: to assert one’s right to, claim.
* * *
b. spec, in Insurance, an appliсation for the compensation guaranteed by an insurance company, esp. for loss of or damage to property, etc., insured.
Oxford English Dictionary Online (2d ed.2008) (emphasis in original).
Defendants argue that Definition l.a. above is the ordinary and popular meaning of “claim” and that a tort action against an insurance company is merely based on an insured’s “demand for something as due.” Thus, the argument goes, the ordinary and popular definition of “claim” includes bad-faith settlements, and Defendants are not in breach of contract for classifying the settlement payment as a “сlaim.” In support of their argument, Defendants correctly point out that the Agreement involves an agency contract, not an insurance policy. This fact, however, does not require the Court to completely ignore the obvious insurance context “gathered from a four-corners’ examination of the [Agreement].”
Pitco Prod. Co. v. Chaparral Energy, Inc.,
The Agreement is steeped in language pertinent to the insurance industry. For example, the Agreement’s bonus provision, where the disputed term “claim” is also located, refers to “[p]remium[s]” received on “[p]olicies” sold by Plaintiff. Certainly, “premium” and “policy” have different meanings when used outside the insurance context. The “contractual intent” behind each term is obvious, however, when “determined from the entire agreement.”
S. Corr. Sys.,
Having determined the parties intended “claim” to mean the compensation guaranteed by an insurance company, we hold the Agreement is unambiguous and Defendants are in breach of contract for treating their bad-faith settlement payment as a loss on the policy sold by Plaintiff. An action alleging bad-faith lies in tort,
not
in the compensation guaranteed under contract, and involves “the unjustified withholding of payment due under a policy.”
Haberman v. The Hartford Ins. Group,
III.
We now turn to the five main issues Plaintiff has raised on appeal. First, he argues the district court erred by limiting recovery from the breach of the implied covenant of good faith and fair dealing to contract damages. Plaintiff asserts the issue of punitive damagеs should have been submitted to the jury. Second, Plaintiff argues the district court erred in granting judgment as a matter of law for Defendants on the fraud/constructive fraud claim. Plaintiff contends this claim should have been submitted to the jury. Third, Plaintiff argues the district court erred in granting summary judgment on the breach of fiduciary duty claim. Plaintiff asserts that whether a fiduciary duty exists between contracting parties is a jury question. Fourth, Plaintiff argues the district court should not have apportioned attorney fees, between the contract and tort claims because the claims were so interrelated. Fifth, Plaintiff argues the district court erred in denying injunctive and declaratory relief to preclude Defendants from continuing their practice of applying tort payments to agents’ Loss Ratios.
A.
We first address whether the district court erred in ruling that Oklahoma law precluded Plaintiff from recovering punitive damages for Defendants’ breach of the implied covenant of good faith and fair dealing.
1
We review the district court’s determination of state law and the propriety of punitive damages de novo.
See FDIC v. Hamilton,
Under Oklahoma law, “[e]very contract ... contains an implied duty of
In contrast, the Agreement between Plaintiff and Defendants is a private, сommercial agency contract. The Agreement lacks the quasi-public nature and unequal bargaining positions present in insurance contracts. Moreover, the Agreement is based upon each party’s attempt to obtain a commercial advantage and is dissimilar to situations where “the insured will be disabled and in strait financial circumstances and, therefore, particularly vulnerable to oppressive tactics on the part of an economically powerful entity.”
Id.
Because no such special relationship еxists between Plaintiff and Defendants, any breach by Defendants, “merely results in damages for breach of contract, not independent tort liability.”
Wathor,
B.
We next address whether the district court erred in granting judgment as a matter of law for Defendants on Plaintiffs fraud/constructive fraud claim. On appeal, Plaintiff argues his constructive fraud claim should have been submitted to the jury. We review a district court’s grant of judgment as a matter of law de novo.
Specialty Beverages, L.L.C. v. Pabst Brewing Co.,
Oklahoma law permits “a plaintiff to bring simultaneous claims for fraud and breach of contract.”
Id.
at 1180. A party, however, “may not obtain double recovery.”
Id.
In addition, “[fjraud is never presumed and it must be proved by clear and convincing evidence.”
Rogers v. Meiser,
While we believe Plaintiffs fraud allegations do not likely warrant submission to the jury, we need not dеcide the matter because Plaintiff already received damages for Defendants’ breach of contract and is not entitled to double recovery under a fraud theory.
See Specialty Beverages,
The record reflects that individuals whom Defendants insured rarely sued for the bad-faith handling of a policy claim. Here, when such an instance did occur on a policy sold by Plaintiff, Defendants clearly informed Plaintiff of the accounting procedure under which his bonus commission would be negatively impacted. After receiving word of his bonus reduction, Plaintiff was allowed the opportunity to contest Defendants’ procedure directly to corporate executives. Defendants considered Plaintiffs arguments but ultimately decided they would continue to apply such bad-faith settlement payments to agents’ Loss Ratios.
Plaintiff has nоt provided evidence that Defendants acted “with some evil intent, or ... such gross negligence [or] such disregard of [Plaintiffs] rights, as deemed equivalent to such intent.”
Id.
In fact, Plaintiffs briefing focuses on a theory of “constructive fraud.” Notably, the difference between constructive fraud and traditional common law fraud is that constructive fraud does not require
intent
to deceive.
Specialty Beverages,
C.
We next address whether the district court erred in granting judgment as a matter of law on the breach of fiduciary claim. The district court ruled no fiduciary duty existed between Plaintiff and Defendants. As with the fraud claim, Plaintiff asserts this question should have been submitted to the jury. Our review of thе district court’s grant of judgment as a matter of law is again de novo.
Specialty Beverages,
Under Oklahoma law, fiduciary relationships “can arise anytime the facts and circumstances surrounding a relationship would allow a reasonably prudent person to repose confidence in another person.”
Quinlan v. Koch Oil Co.,
Again, all that remains for Plaintiff is the possibility of punitive damages. Plaintiff is precluded from recovering punitive damages for any breach of fiduciary duty because the “gravamen of [P]laintiff s action is for breach of an obligation arising from contract.”
2
Quinlan,
D.
We next address whether the district court erred in apportioning attorney fees between the contract and tort claims. In diversity cases, attorney fees are a substantive matter controlled by state law.
North Texas Prod. Credit Ass’n v. McCurtain County Nat’l Bank,
Oklahoma strictly adheres to the “American rule concerning attorney’s fees.”
North Texas,
In the instant case, the district court correctly recognized its duty to apportion fees between the contract claim and the tort claims.
3
Despite Plaintiffs contention to the contrary, Oklahoma does
E.
Finally, we address whether the district court erred in denying Plaintiffs requеst for injunctive and declaratory relief. Injunctive relief is an equitable remedy and a district court’s decision to grant or deny injunctive relief is reviewed for abuse of discretion.
Signature Prop. Int’l Ltd. P’ship v. City of Edmond,
IV.
We do not decide whether Defendants violated Oklahoma public policy. Based on
AFFIRMED.
Notes
. Because Plaintiff already received contract damages and because we hold he is unable to recover punitive damages for any possible breach of the implied duty of good faith and fair dealing, we need not decide whether Defendants, in fact, breached the implied duty of good faith and fair dealing owed to Plaintiff.
. Plaintiffs brief acknowledges "[i]t [is] Defendants’ breach of contract ... that [is] the gravamen of this case.” Brief for the Plaintiff-Appellant at 30.
. No contract exists between the parties gov
. Plaintiff also argues the district court erred in excluding Plaintiff’s expert witness and evidence of Defendants’ conduct outside Oklahoma. We resolve these issues summarily. Plaintiff's expert was prepared to testify that Defendants’ practice conflicted with accepted industry practice. Plaintiff's evidence of Defendants’ conduct outside Oklahoma showed that in some instances Defendants attributed bad-faith payments as "claims” on agent policies and in other instances, they did not. As we observed throughout this opinion, because Plaintiff has already been awarded contract damages, all that remains is the possibility of punitive damages. Plaintiff’s expert testimony and his minimal and conflicting evidence of Defendants' conduct outside Oklahoma do not materially advance the punitive damages issue, i.e., whether Defendants acted with "evil intent” in contracting with Plaintiff. Thus, we need not decide whether the district court abused its discretion in excluding Plaintiff’s expert witness and evidence of Defendants’ conduct outside Oklahoma because any potential error was certainly harmless.